Which of the following statements is TRUE?
A) Consumer surplus under competition is greater than consumer surplus under monopoly.
B) Producer surplus under competition is greater than producer surplus under monopoly.
C) Total surplus under monopoly is greater than total surplus under competition.
D) Deadweight loss is greater in markets where monopoly power is less significant.

Question

Quizplus · Accepted Answer

Consumer surplus under competition is greater than consumer surplus under monopoly due to lower prices and greater availability of goods and services in a competitive market. In a monopoly, the firm has market power and can charge higher prices, leading to less consumer surplus. B and C are incorrect as the opposite is true under competition. D is incorrect as markets with significant monopoly power create greater deadweight loss due to the lack of consumer and producer surplus that could exist in a more competitive market.

Which of the Following Statements Is TRUE